FCA proposes 0.8% payday loans cap
The Financial Conduct Authority have come up with a plan.
They want to see a cap on the amount that payday lenders can charge their customers, and they've announced what they're going to do.
The short version is that payday loan rates should be capped at 0.8% a day of the amount borrowed, and the FCA add that in total, no-one should have to pay the loan companies back more than double what they borrowed.
These changes will come into play in January 2015, and some say that those desperate for money will avoid companies like Wonga and Quick Quid, and go back to old fashioned loan sharks who will reclaim debts with thumb screws or whatever it is they do.
The new rules say that there's also going to be a cap on default charges, which is probably being set at £15.
FCA chief executive Martin Wheatley said: "For the many people that struggle to repay their payday loans every year this is a giant leap forward. From January next year, if you borrow £100 for 30 days and pay back on time, you will not pay more than £24 in fees and charges and someone taking the same loan for 14 days will pay no more than £11.20. That’s a significant saving."
"For those who struggle with their repayments, we are ensuring that someone borrowing £100 will never pay back more than £200 in any circumstance."
The FCA predict that these new rules will see payday loan providers losing £420m in revenues each year.